NESG calls for better structured, effective diversification of Nigerian economy

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THE Nigerian Economic Summit Group, NESG, has called for a better structured and effective diversification of the nation’s economy in view of its huge exposure to the vagaries of oil price fluctuations.

In a statement released on Tuesday entitled “Matters of Urgent Attention“, the group noted the continuing crucial role of the Oil and Gas sector in the economy and applaud the work now being done by the Presidency to see to the quick passage of the Petroleum Industry Bill (PIB) and urged further stakeholder consultations so that the resultant law will create the required enabling environment for investment flows, reserves enhancement, technology transfer and utilization efficiency.

The NESG noted the evolving developmental roles of central banks around the world, especially as it concerns resource allocations and stated that such allocative roles must be undertaken in a very open, transparent and fair manner.

“The Group expresses serious concerns about how the Central Bank of Nigeria, CBN, has carried on the business of foreign exchange transactions, loan disbursements (intervention funds) and price fixings without appropriate policy clarity.  This can be subject to abuses, manipulations and significant market disruptions, reflective of a policy akin to crony capitalism. We therefore respectfully request the appropriate authorities to properly review this policy to restore credibility into our financial sector,” it said.

It expressed severe concerns about certain provisions of the ‘repealed and re-enacted’ Bank and Other Financial Institutions Act 2020; recently passed by both houses of the National Assembly, and in the process of being transmitted to the President for assent.

The Bill, according to the NESG, contains certain provisions that breach the provisions of the Nigerian Constitution, confers immunity on CBN officials and exempts actions by the CBN from judicial review. “These are draconian, totalitarian and inimical to the development of a stable and transparently regulated financial sector. We respectfully request that the President should please withhold his assent until the Bill is properly reviewed, amended and is made fit for purpose. We also most respectfully request that our legislative houses should subject all Bills, in particular, such crucial bills, to the most efficient scrutiny necessary to assure compliance with the Nigerian Constitution, transparency, good governance and the best interest of the people of Nigeria,” it noted.

It observed with concern some distortions in the liquidity and interest rate management of our financial system which has resulted in rate distortions causing grave disadvantage to domestic investors and pensioners. “This will occasion major disincentives to savings and investments and thereby, be a disadvantage to Nigerian pensioners and long term savers.

 

“This is inimical to this administration’s concern for the elderly, the weak, the infirmed and those who had served this country meritoriously in their prime. It must be stressed that our country needs to mobilise domestic savings and investments even as we seek to attract foreign investment and we should be careful not to initiate policies that appear to discriminate against or discourage domestic savings and investors. Policies making average Nigerians poorer by the day should not be encouraged,” it said.

The NESG, however, commends government’s efforts on infrastructural developments across the country and respectfully advises that given the enormity of financial resources required to meet our largely decayed infrastructural stock, many more options should be explored to attract private sector capital and involvement.  “However, such options and alternatives must always be subject to clear rules, open, transparent, following due process, and the enshrinement of the sanctity of contracts,” it said.

It acknowledged government efforts at reopening the eastern ports and urged that the rail link between Onne and Port Harcourt, should be given urgent attention so as to avoid replicating the Apapa Port experience. “In the same light, we wish to call for urgent solutions to the Apapa Port congestion, and other difficulties in effecting prompt and efficient export and import of goods. The Seaport is an economic lifeline critical for the diversification of the Nigerian economy,” it said.

On the deregulating fuel and electricity prices, it urged that proper policies, processes and procedures be put in place to ensure that all the reforms (beyond price deregulation) necessary to facilitate the smooth functioning of both the fuel and electricity markets are effectively and conclusively implemented and that adequate communication to stakeholders and the general public on the benefits derivable from these actions must also be regularly carried out.

The Group notes the frequent expression by the government to work with the private sector in nation-building efforts, but observes that a lot more work needs to be done on both sides to obtain the best benefits of such collaboration. “It is therefore important that concrete steps must be taken to address the mutual distrust and build institutions that work regardless of persons.

“In consonance with our strong commitment to partner with government in ensuring an appropriate, efficient and transparent environment for doing business in our country, the NESG pledges its commitment and the commitment of its other private sector counterparts to work effectively and transparently with the government in combating these challenges, and thereby assure a growing, strong, vibrant efficient, inclusive, secure and healthy economy. All hands must be on deck in collaboration, as we work hard and without prejudice to achieve the Nigeria of our dreams,” the Group added.

– Sept. 8, 2020 @18:55 GMT |

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